Regulatory policy

What is the goal of public policy?

Comment

The goal of any policy is not only to effect change, but also to educate the public. This educational function is important but rarely mentioned explicitly, perhaps for fear of being taken for a propagandist. So be it: I wholeheartedly embrace the notion of politics as a means of educating voters.

How does this work? Consider the 1969 moon landing. It had tangible benefits, like stopping the Soviets from weaponizing space. But just as important was the message he conveyed to the American public: Think big, he said; science can lead to grand and astonishing achievements. The educational aspect of the policy has greatly increased its value.

Or consider NAFTA and its successor, the USMCA. These “free trade” agreements actually increased many regulations, and their free trade benefits are actually quite small (although still positive). Still, I’m excited about the policies. At least they sent the message to voters that trade and regional cooperation is a good thing and should be encouraged. This educational effect was particularly useful in Mexico, because the underlying assumption of the message is that Mexico is a stable democracy like the rest of North America.

Of course, there is also the danger of a backlash effect. If you say NAFTA will create well-paying jobs, and it won’t, people might end up completely against free trade. This is a reason to be cautious, but it is not a reason to neglect the educational effects of policies.

There are also policies with educational costs rather than benefits. President Joe Biden’s student debt cancellation order sends the message that America’s students and education sector are especially deserving of largesse. This is a negative message on the net, even apart from the other deleterious effects of the policy, especially its costs. A much better message would be that the American higher education system needs serious reform.

Minimum wage hikes also send the wrong message to voters. Yes, there is literature suggesting that such increases destroy far fewer jobs than previously thought, and may have considerable side benefits, such as preventing suicides. Yet a minimum wage is a kind of price control, and most price controls are bad. Voters may not realize how different (and better) minimum wage hikes are from most price controls. Instead, they get the message that the way to a higher standard of living is through government fiat, rather than better productivity.

If you think that’s far-fetched, consider the initiative passed by the California Senate this week. The bill would create a government panel to set wages and work standards for all fast food workers in the state, and union supporters hope the plan will spread nationwide. It may or may not happen, but these are precisely the avenues that are opened up by the demand for the minimum wage. Many people hear a bigger and more ambitious message than the speaker wants to send.

So what messages, in the broadest terms, should policies convey? I would like to see an increased respect for cosmopolitanism, tolerance, science, fair laws, vibrant markets, freedom of speech and the importance of continuous productivity gains. Obviously, any person’s list will depend on their values, but for me, educational goals are more than a secondary factor. When it comes to prioritizing reforms, the focus should be on those that will “give people the right idea,” so to speak.

Unfortunately, the American public does not have many ways to receive economic or political analysis. Most people don’t and never will know the intricacies of the various policies. But they absorb the main messages from their political leaders. They also have a general idea of ​​what their country is doing and, for better or worse, a certain loyalty to the status quo. In general, I have noticed that the French tend to favor the French system, the Australians a version of the Australian system, etc. These correlations function as both cause and effect, so choosing a policy very often makes it more popular.

In other words: for better or for worse, our political choices often succeed in “educating” us. Pretty much everything we humans do in one way or another is some form of communication. The same goes for policy development.

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• The biggest threat to the US economy is policymakers: Allison Schrager

• Biden’s economic hubris gives way to humility: Karl W. Smith

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the Marginal Revolution blog. He is co-author of “Talent: How to Identify the Energizers, Creatives and Winners in the World”.

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